I don't know much more than Kathy, but I think shell companies can also be used for money laundering.
If LexCorp makes money illegally, they have the money in hand but can't use it without raising eyebrows. Officially, they shouldn't have the money.
So, they can set up dummy corperations that supposedly do buisiness, and use them to explain where the money came from. The dummy corperations will fudge their books, reporting small losses here and there. "Oops. We ordered a shipment, but it broke, and we already paid Lexcorp..." That sort of thing.
As Kathy said, they can be used to buy and run other companies. CNN is a cable channel started by Turner Broadcasting. Turned Broadcasting is owned by something like Turner Enterprises. Turner Enterprises was bought out by AOL. Now, AOL owns CNN, but to find that out, you'd have to trace through all those levels of subsidiaries.
AOL also owns a bunch of other stuff, including Cartoon Network, Hanna-Barberra, and Netscape. Their merger with Time-Warner gave them Time-Life, Warner Brothers Studios, and DC Comics (which owns Superman, among others), among others.
Pepsi used to own KFC, Taco Bell, and Pizza Hut, but those three split off a while back. I believe PepsiCo still owns MTV and VH1.
So, imagine that sort of thing, except that the subsidiaries aren't big, well-publicized companies. They're little companies which don't visibly do much of anything whose ownership and paper trails are deliberately made as confusingly as possible. A casual glance would never tell you that Mom and Dad's Friendly Corner Drugstore is, in fact, ultimately owned by LexCorp. Even a close look wouldn't show a direct link. You'd have to do some deliberate and determined digging to find the connection. Mom and Dad's Friendly Corner Drugstore could then be used to do anything that Lex didn't want directly associated with his company for some reason.
Paul
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This is exactly the info I needed! You've just fixed my problem in just one post. How do you do that? 
